Question

The Marchetti Soup Company entered into the following transactions during the month of June:

a. purchased inventory on account for $160,000 (assume Marchetti uses a perpetual inventory system)
b. paid $43,000 in salaries to employees for work performed during the month
c. sold merchandise that cost $126,000 to credit customers for $215,000
d. collected $195,000 in cash from credit customers.
e. paid suppliers of inventory $140,000.

Assume that the opening balances in each of the accounts is zero except for cash, accounts receivable, and accounts payable that had opening balances of $66,500, $46,000, and $25,000, respectively. (Enter the transaction number in the column next to the amount.) Prepare journal entries for each of the above transactions.

Answer 1

Answer and Explanation:

The journal entries are shown below:

a. Merchandise Inventory Dr $160,000

To Account payable $160,000

(Being inventory purchased on account)

b. Salaries expense Dr $43,000

To Cash $43,000

(Being salaries are paid in cash)

c. Account receivable Dr $215,000

To Service revenue $215,000

(being merchandise sold)

d. Cash Dr $195,000

To Account receivable $195,000

(being collection is recorded)

e. Supplies Dr $140,000

To cash $140,000

(being supplies paid in cash)